The Resilience of Brazilian Business Groups


Wlamir Gonçalves Xavier, Rodrigo Bandeira-de-Mello e Rosilene Marcon



Research in focus: The ownership structures of business groups in Brazil. 

Brazil’s large groups address institutional difficulties well, and when the government is a minority shareholder, they are able to achieve better results.

Objective: To empirically test the effect of the institutional environment on brazilian business groups during the 2001–2009 period and to assess the resilience of such groups.


• Data collected between 2001 and 2009 from 317 Brazilian business groups with average revenues over R$ 1 billion.

• Measurement of the institutional environment for four groups of variables, with the objective of detecting reforms enacted during the study period: (1) capital markets (exchange rate stability, national credit ratings, interest rate spreads); (2) product and service markets (the IMF index capturing economic liberalization, governance and market protectionism); (3) labor market; (4) legal and regulatory issues, both based on the IMD World Competitiveness Index. Political connection variables were also used, such as campaign donations and government shareholder status.


• Brazilian groups navigate the Brazilian institutional environment well, except with regard to two aspects: the quality of government expenditures and taxes.

• When the government is either a direct or an indirect shareholder of the company, the harmful effects of the environment are mitigated, and even the tax burden is partially offset.

• Political campaign donations have no discernible effect on the revenues of the companies surveyed.

What's new

• Brazilian business groups have advantages with regard to overcoming market faults. For example, they usually have a controlling interest in financial institutions and can, therefore, easily protect themselves from fluctuations in both exchange rates and interest rates.

• Being able to rely on the government as a minority shareholder has a significant influence on results. Stateowned banks, for example, offer cheaper financing and longer credit periods. The government can also offer subsidies and provide relief for certain sectors.

Contact the author Rodrigo Bandeira de Mello. 

Learn more about the research conducted by Rodrigo Bandeira de Mello.